External funding is an essential factor in order to grow and expand your business. Finance options vary widely, from crowdfunding and angel investments to overdrafts and credit cards, but the business loan is perhaps the most well-known avenue of external funding.
No two business borrowing schemes are the same, but they do all fall into one of two distinct categories: a secured or an unsecured loan. The funding options vary significantly, with lenders offering anywhere from £1,000 to £15 million, depending on a variety of factors and safeguards.
But why use a business loan in the first place? Whether you’re looking to expand, invest in new equipment, or borrow to manage your cash flow – a Lloyd’s Bank Business Loan can help you thrive:
Expand & conquer
Physically expanding your existing business into neighbouring territories can certainly yield an increased ROI and be reason enough to seek external investment, but this isn’t the only way you can expand your existing model. From moving into larger premises to acquiring external storage facilities and less ‘physical’ representations such as media and advertisement infiltration of an untouched market – expansion offers a myriad of benefits specific to the capital gains potential of your enterprise.
This sentiment is shared by James Wright, Managing Director of Jude’s Ice Cream, previous winners of The Lloyd’s Bank Positive Social & Sustainable Impact Award comments:
“Jude’s, the super-premium and award-winning sustainable ice cream business, have benefited from the certainty of a Lloyds’s loan to support their growth and expand their manufacturing capacity.”
As with all things in the world of business, there is no one size fits all strategy for growth. Some operations have busy or quiet periods at different times of the year, or sometimes demand is scaling faster than your current growth. In these cases, a business loan can be the saving-grace method of increasing your personnel to better serve your current day-to-day requirements.
Another key benefit to funnelling fiscal aid towards increasing your workforce is in the avoidance of creating a negative atmosphere, caused by overburdening staff with an unreasonable volume of work, which can in turn lead to a higher rate of turnover. Cultivating an environment with realistic workload expectations and investment in further training are both avenues made more available with external funding.
Abdul Shiil, Co-Founder and Director of Sahan Cares, previous winner of The Octopus Electric Vehicles Purpose Before Profit Award, comments:
“In all honesty, we used to be scared about the term “loans” or anything to do with it! Our mentality in the past was that we did not want to owe anyone anything. We were also fearful of it.
“However, we soon realised that we needed to invest in our business for us to grow and scale. Taking out a business loan allowed us to do just that. Also, when we realised that we could spread the payment over a few years, it made it much more affordable for us.”
In any business, both customer retention and attraction are vital for growth. In order to achieve this, targeted marketing efforts, particularly as we are now present in a digital age, are an invaluable asset for keeping your customer base loyal and presenting yourself as attractive for newcomers.
New marketing systems, social media, digital marketing efforts and even website re-designs are ideal areas of your business that can benefit from a cash injection. In the case of websites, a recent study has identified that nearly 60% of search traffic is now coming from mobile phones* – which should be a major red flag to a business that hasn’t yet optimised their current site for mobile browsing. With brand visibility, perception and greater insights into operations, it really is a no brainer.
Capitalise on uncertainty
Capitalising on a business landscape currently in turbulent times can take many forms. One significant manifestation of this would be buying out a struggling competitor, which can be an excellent way of synergising both business operations. For an SME in particular, competitor acquisition is vital in accelerating growth through inorganic means, establishing your business as the vanguard of your industry. This could raise your service prices and lower your inhouse costs significantly.
It goes without saying that due diligence must be carried out prior to seeking a business loan for this purpose, but the potential capital yield can be astronomical.
In these uncertain times, a business loan can give you the flexibility to capitalise on unforeseen opportunities that may present themselves!
Be it computer technology, heavy duty machinery or Dunder Mifflin paper for your office printer needs, all businesses require kit of some variety. Equipment needs can be operational upgrades, replacements or completely new resources for your office.
The benefits here are clear. Without certain pieces of equipment readily available, some businesses will grind to a halt – effectively investing in this path of funding as essential.
While it may appear as an initially counterintuitive measure, taking out a business loan to pay off an existing loan with soaring interest is a very useful and fiscally beneficial practise used by businesses across the globe.
With everyday operational expenses accumulating alongside high-interest payments from an older, more punishing loan agreement, a low-interest business loan can effectively act as a lifeline during periods of financial difficulty.
There is still a perception held by a few that speaking openly about business loans, how your business may have used and benefited from one in the past, has an inherent stigma attached – representing the business as ‘in financial trouble’ to be utilising a loan. This is a complete mischaracterisation. In fact, the less solvent the business is in the first place, the less likely a loan will even be approved.
The UK economy relies so heavily on business. Anything that is a benefit to business should be celebrated – this includes business loans, without which growth and expansion would be hindered to the extent that the economy would be set back further.